NH Securities Teams Up with MBK, Raises 580 Billion Won by Divesting 'Golfzon' Acquisition Financing

Golfzon County and Osstem Implant Acquisition Financing
Last Week's Consecutive Loan Sell-Downs to Secure Liquidity
NH Securities: "Unrelated to Korea Zinc Tender Offer, Simply for Book Management"
IB Industry: "For Large-Scale Investment and Credit Line Management"

NH Investment & Securities last week resold (selldown) approximately 580 billion KRW worth of acquisition financing it had lent to private equity fund MBK Partners for corporate acquisitions. Following the sale of a 190 billion KRW loan provided when MBK acquired Ostem Implant, Medit, and BHC, it also monetized 390 billion KRW of acquisition financing lent for the acquisition of Golfzon County. Although NH Investment & Securities claims this is simply for book management purposes, industry insiders view it as a move to secure funds for lending 1.5 trillion KRW for the public tender offer of Korea Zinc.

On the 27th, Kang Sung-doo, CEO of Youngpoong, held a press briefing at the Seoul Press Center to explain Youngpoong's public tender offer for Korea Zinc shares and presented Youngpoong's position. Photo by Younghan Heo younghan@

According to the investment banking (IB) industry on the 30th, NH Investment & Securities securitized 390 billion KRW of acquisition financing lent to Korea Golf Infrastructure Investment. This involved transferring 241 billion KRW of senior loans and 150 billion KRW of mezzanine loans to Meritz Securities Trust, then selling trust beneficiary certificates in the form of securitized securities to the market to raise cash. In this process, NH Investment & Securities also provided credit facilities guaranteeing the principal and interest repayment of the securitized securities.

Korea Golf Infrastructure Investment is a special purpose company (SPC) established in 2018 by MBK to acquire Golfzon County, the number one golf course operator in South Korea. It holds 54.83% of the management control shares of Golfzon County and 3.54% of convertible preferred shares (CPS). CPS are preferred shares with high dividend rates and no voting rights but come with the right to convert into common shares.

The remaining 41.63% of common shares are held by Golfzon Newdin Holdings. Golfzon Newdin Holdings is the holding company of Golfzon Newdin Group, which owns Golfzon Commerce, Golfzon County, and other related entities. NH Investment & Securities acted as the lead arranger for the acquisition financing when MBK acquired Golfzon County, providing senior and mezzanine loans from its own funds.

It is understood that MBK recently refinanced the acquisition financing for Golfzon County with NH Investment & Securities as the lead arranger. After attempting an exit through an initial public offering (IPO) in 2022 but failing to list, MBK shifted to a sale strategy. Last year, it selected Morgan Stanley as the lead manager and attempted to sell at around 2 trillion KRW but failed to find a buyer. Subsequently, as the acquisition financing matured, it is interpreted that refinancing was recently carried out.

Golfzon County Ora CC

Previously, NH Investment & Securities also resold acquisition financing worth 190 billion KRW lent to MBK for acquiring Ostem Implant, Medit, and BHC. This included 120 billion KRW of senior and mezzanine loans lent to Dentistry Investment, an SPC established by MBK to acquire Ostem Implant, as well as loans lent to Digital Dentistry Solution Holdings, the Medit acquisition SPC, and Global Gourmet Services, the BHC acquisition SPC, which were bundled and sold to the market in the form of collateralized loan obligations (CLOs).

NH Investment & Securities stated that the consecutive acquisition financing selldowns are unrelated to the Korea Zinc acquisition financing and are simply for book management purposes. The book refers to the investment limit that a securities firm can use for corporate credit and other purposes. There are limits based on legal ceilings, internal risk management, and holding company risk management regulations. An NH Investment & Securities official said, "Selldown of acquisition financing for book management is a common book management method."

However, the IB industry interprets the selldown of acquisition financing worth 580 billion KRW to MBK within a short period to create book capacity as preparation for large-scale credit or investment. The acquisition financing of 1.5 trillion KRW that NH Investment & Securities plans to lend to MBK is known to have a maturity of nine months with an average interest rate in the 5% range. It is expected that NH Investment & Securities will inject as much of its own funds as possible and then reorganize investors to refinance after nine months.

An industry insider said, "Along with the Korea Zinc acquisition financing, it is understood that the 300 billion KRW borrowed by Young Poong to lend to MBK was also provided by NH Investment & Securities," adding, "In a situation where large-scale cash liquidity is being injected, securing funds and managing book limits are necessary." Another insider commented, "As the year-end approaches, many securities firms have their book limits fully utilized," and "It would be difficult to inject large-scale funds without selldown of existing acquisition financing."